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2 June 2017 By Swaha Pattanaik Follow @swahapattanaik

Bank of England support staff are threatening to strike over a sub-inflation pay rise. Across the UK economy, rising prices are squeezing incomes. This hits the least well-off the hardest. But it would be hard for the BoE governor to undermine his efforts to keep prices in check.

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The Unite union, which represents workers in security, catering, legal, HR and other services at the Bank of England, said on June 1 that it was balloting members on whether to hold a strike this year in protest at below-inflation pay rises. The ballot will close on June 21. The BoE declined to comment.

Unite said the central bank had announced a 1 percent increase in the “pay pot” and that the wage increase individuals would receive was decided at the discretion of line managers, so that some employees could receive less than 1 percent. A Bank of England source told Breakingviews that the central bank had also allocated an extra 0.5 percent to fix pay anomalies.

The British government has capped pay rises for public sector workers at 1 percent. While this limit does not apply to the independent central bank, the BoE operates in an environment of pay restraint for public officials.

The BoE said on May 11 it expected the inflation rate to be at 2.6 percent in the second quarter of 2018, 2.2 percent in the second quarter of 2019, and 2.3 percent in the second quarter of 2020.

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